Mutual funds remained stuck in net redemptions in June, yet ETF net sales surged, powered by a rush into fixed income, according to the Investment Funds Institute of Canada (IFIC).
In a report released Tuesday, the industry trade group said mutual funds recorded $1.9 billion in net redemptions in June, up slightly from $1.8 billion in May.
For the first half of 2024, mutual funds generated $3.1 billion in net redemptions, which marks an improvement from the $12.8 billion in redemptions recorded in the same period last year.
In terms of asset mix, the picture is much the same this year, with balanced funds in hefty net redemptions (almost $19 billion worth) and equity funds recording much more modest redemptions ($1.6 billion). This was partly offset by bond funds, which had $10.1 billion in net sales for the first half of the year, and specialty funds, with $3.8 billion in net sales.
Compared with last year, equity fund redemptions are down notably, falling to $1.6 billion in the first half of 2024 from $9.6 billion in 2023. Meanwhile, balanced fund redemptions have only eased slightly — bond and specialty fund net sales are both up year over year.
While mutual funds remained in negative sales territory in June, ETF net sales jumped, surging from $4.4 billion in May to $10.1 billion in June.
Bond ETFs led the way, with monthly net sales of $5.35 billion in June, up from $1.3 billion in the previous month.
Outside of the bond category, equity ETF net sales were more or less unchanged at $2.8 billion in June, while sales in balanced and specialty asset classes ticked higher from the previous month. Money-market funds joined the rush into fixed-income funds, with monthly net sales jumping from just $86 million in May to $1.1 billion in June.
In the first six months of the year, ETF net sales were up to $32.6 billion from $18.2 billion in the same period last year.
Equity ETFs drove net sales in the first half, with $19 billion worth, followed by bond funds at $10.6 billion.
The balanced and specialty fund categories were also in positive sales territory, with $2.3 billion and $49 million in first half net sales, respectively.
The strength in ETF sales powered assets higher too. Total assets under management (AUM) reached $440.5 billion at the end of June, up by $11.3 billion or 2.6% from the previous month.
Assets are up by almost $100 billion over the past year, rising from $348.1 billion in mid-2023, a gain of more than 25%.
On the mutual fund side, the weakness in sales is being offset by market gains, allowing assets to continue climbing, albeit more slowly. Total mutual fund AUM rose by $14.2 billion in June to $2.07 trillion.
Mutual fund assets are growing much slower than ETFs, but still gained 9.4% from mid-2023 to the halfway mark of 2024.